Exam Life-Producer Topic 1 Question 84 Discussion

Actual exam question for Maryland Insurance Administration's Life-Producer exam
Question #: 84
Topic #: 1
A transaction in which a new life insurance policy is purchased, and an existing life insurance policy is surrendered is called:

Suggested Answer: B Vote an answer

Comprehensive and Detailed Step by Step Explanation:Areplacementoccurs when a new life insurance policy is purchased, and the existing policy is surrendered, terminated, or its benefits reduced to make way for the new policy.
* Replacement (B):This is regulated to ensure the policyholder is not disadvantaged by switching policies, often requiring additional disclosures and forms, like Maryland's "Important Notice Replacement of Life Insurance or Annuities."
* Nonforfeiture (A):Refers to retaining cash value benefits when a policy lapses or is canceled, not applicable here.
* Reinvestment (C):Generally relates to financial or investment accounts, not life insurance.
* Rollover (D):Pertains to tax-advantaged accounts like IRAs, not applicable to insurance.
References: Maryland Replacement Regulations, Disclosure Requirements, and Consumer Protections.

by Camille at Feb 17, 2026, 02:13 PM

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